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Form 10E: Why salaried employees must file this to get relief from tax on arrears
Don’t let a salary hike with arrears push you into a higher tax slab—Form 10E can help you claim relief and avoid paying extra tax on past income.
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Why you need to claim Form 10E when you receive salary arrears
If you have received a salary hike or promotion with arrears—salary that should have been paid in the previous years—it can inflate your taxable income in the year you receive it. Unless you can claim tax relief, you may end up paying more tax than necessary. Enter Form 10E. It assists you in reducing your taxation by allowing you to claim relief under Section 89(1) of the Income Tax Act for advance or excess income.
If you have received a salary hike or promotion with arrears—salary that should have been paid in the previous years—it can inflate your taxable income in the year you receive it. Unless you can claim tax relief, you may end up paying more tax than necessary. Enter Form 10E. It assists you in reducing your taxation by allowing you to claim relief under Section 89(1) of the Income Tax Act for advance or excess income.
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How it reduces your tax burden
Tax in India is calculated through a slab system that is progressive in nature. If you are getting arrears for one year, your total income will go up—maybe pushing you into a higher tax slab than usual. But you did not earn the whole income in the said year. Form 10E allows the Income Tax Department to adjust the arrears to the years it was actually due in. This helps you to get relief from the additional tax due to bunching of income.
Tax in India is calculated through a slab system that is progressive in nature. If you are getting arrears for one year, your total income will go up—maybe pushing you into a higher tax slab than usual. But you did not earn the whole income in the said year. Form 10E allows the Income Tax Department to adjust the arrears to the years it was actually due in. This helps you to get relief from the additional tax due to bunching of income.
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Don’t just add the arrears to your ITR
The majority of salaried people ignore or miss out on filing Form 10E, believing that they can simply add the arrears to their ITR. But the Income Tax Department has made one thing very clear: if you do not file Form 10E, your claim for relief under Section 89(1) may be disallowed even if you are eligible for it. Filing Form 10E online from the income tax portal before filing your ITR ensures that your arrears relief is done correctly and your refund (if any) is not delayed.
The majority of salaried people ignore or miss out on filing Form 10E, believing that they can simply add the arrears to their ITR. But the Income Tax Department has made one thing very clear: if you do not file Form 10E, your claim for relief under Section 89(1) may be disallowed even if you are eligible for it. Filing Form 10E online from the income tax portal before filing your ITR ensures that your arrears relief is done correctly and your refund (if any) is not delayed.
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When and how to file it online
Form 10E must be filed before filing your income tax return (ITR). To do this, log into your account on the income tax e-filing portal, go to ‘e-File’ > ‘Income Tax Forms’ > ‘File Income Tax Forms’, and select Form 10E. Fill in the details of your arrears and income from the previous years as well as the current financial year. Once submitted, the system recalculates your tax liability and applies the necessary relief.
Form 10E must be filed before filing your income tax return (ITR). To do this, log into your account on the income tax e-filing portal, go to ‘e-File’ > ‘Income Tax Forms’ > ‘File Income Tax Forms’, and select Form 10E. Fill in the details of your arrears and income from the previous years as well as the current financial year. Once submitted, the system recalculates your tax liability and applies the necessary relief.
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Keep documents handy
Keep handy your salary slips, employer certificates, or Form 16 with the breakup of your arrears. You will need these documents to correctly calculate the amount of income received in which year and to support your claim, should the Income Tax Department request the documents for any clarification.
Keep handy your salary slips, employer certificates, or Form 16 with the breakup of your arrears. You will need these documents to correctly calculate the amount of income received in which year and to support your claim, should the Income Tax Department request the documents for any clarification.
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Avoid penalties and delays—file it correctly
If you don't file Form 10E but still claim relief while filing your ITR, your return will be processed without the benefit, resulting in a greater notice of tax or lesser refund. Worse, you will receive a notice for mismatch or incorrect filing. Filing Form 10E is simple, free of charge, and can save you thousands of taxes—do it.
If you don't file Form 10E but still claim relief while filing your ITR, your return will be processed without the benefit, resulting in a greater notice of tax or lesser refund. Worse, you will receive a notice for mismatch or incorrect filing. Filing Form 10E is simple, free of charge, and can save you thousands of taxes—do it.
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Let arrears be a gain, not a tax pain
Salary arrears are a pleasant bonus to your pay, but if not planned, they could also lead to an unpleasant spike in your tax outgo. Form 10E ensures that you are taxed appropriately, based on what you have earned and when. File it punctually, and have your arrears working for your goals—not the taxman's.
Salary arrears are a pleasant bonus to your pay, but if not planned, they could also lead to an unpleasant spike in your tax outgo. Form 10E ensures that you are taxed appropriately, based on what you have earned and when. File it punctually, and have your arrears working for your goals—not the taxman's.
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